Proposed risk-based advisory services to a fictitious hardware manufacturer

1. Deloitte Advisory
Response to Request for Proposal
Handy DIY, Inc.
European Operations – Travel Irregularities Identification and Remediation
Spring 2017

2. 2
Table of Contents
Cover Letter.................................................................................................................................. 3
Executive Summary ..................................................................................................................... 4
Our Understanding of HDI........................................................................................................ 4
Our Scope of Services to Meet Your Needs............................................................................. 4
Additional Issues & Concerns................................................................................................... 4
Deloitte Advisory: How We Can Help........................................................................................... 5
Relevant Market Offerings........................................................................................................ 5
Our Team ................................................................................................................................. 5
Our Approach ............................................................................................................................... 6
Work Stream 1: European Regulations........................................................................................ 7
Current Status Analysis............................................................................................................ 7
Fieldwork .................................................................................................................................. 7
Reporting.................................................................................................................................. 7
Implementation......................................................................................................................... 7
Work Stream 2: Expense Reimbursement System ...................................................................... 8
Current Status Analysis............................................................................................................ 8
Fieldwork .................................................................................................................................. 8
Reporting.................................................................................................................................. 8
Implementation......................................................................................................................... 8
Work Stream 3: Expense Monitoring Tool.................................................................................... 9
Current Status Analysis............................................................................................................ 9
Reporting.................................................................................................................................. 9
Implementation......................................................................................................................... 9
Timeline...................................................................................................................................... 10
Breakdown: Work Stream 1.................................................................................................... 10
Breakdown: Work Stream 2.................................................................................................... 10
Breakdown: Work Stream 3.................................................................................................... 10
Fee Proposal .............................................................................................................................. 11
Total Professional Fees and Expenses.................................................................................. 11
Breakdown: Professional Fees............................................................................................... 11
Breakdown: Resourcing Mix................................................................................................... 11
Contact Us.................................................................................................................................. 12

3. 3
Cover Letter
March 4, 2017
Dear Handy DIY,
Thank you for the opportunity to propose on this exciting European expansion. Like you,
we understand just how crucial this growth stage is for your company. Organizational
change, especially when confronted with unfamiliar international operations, is difficult
to navigate and manage. We’re here to help.
Deloitte Advisory adds value to your firm. Our diversified services, paired with our
comprehensive experience, allow us to tackle each problem with a uniquely deliberate,
impact-driven mindset. For over 100 years, our clients have relied on us for dynamic
solutions to their most challenging problems. We are looking forward to doing the
same for you.
Deloitte Advisory

4. 4
Executive Summary
Our Understanding of HDI
Handy DIY Incorporated (HDI) manufactures an array of industrial power tools, ranging from
electric drills and band saws to traditional hand tools. In addition to these well-established
offerings, the firm is working to move into the ready-to-assemble home furniture market. Over
the past few decades, the company has created a stable presence in the U.S. and enjoys strong
brand loyalty for their effective product lines. Considering their historical success and healthy
foundation, HDI has expanded into Europe.
After opening the European headquarters to facilitate the expansion, Handy DIY focused on
building an online presence and continuing to expand their product line in the international
market. The firm’s efforts were met with incredible success within a very short time frame. In
addition to the existing 7 retail locations in operation, 12 more are being constructed throughout
Europe. Due to this accelerated physical growth, the company has tasked 20 U.S.-based
employees with the responsibility of supporting European management to implement a
consistent operating model internationally. This frequent international travel has recently
troubled HDI, which has previously lacked a travel policy and oversight program to monitor
employee travel expenses. Management has discovered irregularities in these expenses and
would like assistance with the assessment of relevant European regulations, an identification
and examination of expense report inconsistencies, and the implementation of an oversight
program to monitor travel expenses.
Our Scope of Services to Meet Your Needs
Service 1: Prepare a report of compliance requirements, as well as strategies for realizing such
compliance, with respect to HDI’s European expansion. Produce the following:
• Regulations relevant to expense reimbursements, entertainment expenses, and other
travel expenses
• Risks associated with expansion into Europe
• Outsourcing options to support the monitoring service
• Other relevant matters associated with expanding internationally
Service 2: Analyze HDI’s ability to rely on automated controls. Prepare a report detailing the
following:
• Risk associated with the current automated expense reimbursement process
• How HDI can address these risks, in addition to similar concerns about the audit plan
• Options for assistance by Deloitte
Service 3: Develop a tool to help monitor expense compliance and detect/investigate irregular
activity. Produce a tool that does the following:
• Analyzes and compares expense reports to identify inconsistencies
• Performs pattern analyses on expense report categories
• Generates visual reports to represent summaries of data analyses
Additional Issues & Concerns
• Historical issues with change management
• Employee burnout and turnover

5. 5
Deloitte Advisory: How We Can Help
Relevant Market Offerings
Deloitte’s Regulatory and Compliance Program Services are widely regarded as leaders in the
field of risk management services. As a member of the global network, the Regulatory and
Compliance service line can work internationally with the objective of transforming foreign
regulations into productive value.
The Internal Audit service is at the forefront of tailoring technological methods to coordinate
global resources to fit the needs of individual firms. Through Cosourcing, IT Internal Audit,
Internal Audit Analytics, IA and the Digital Enterprise, and Outsourcing services, the Internal
Audit division can address all areas of potential risk and problems facing clients today.
The Deloitte Forensics & Investigation team uses market-leading technology to help sustain
long-term growth in the face of unfamiliar challenges. The F&I team will provide the most
efficient and value-enhancing strategies to combat exposure to global financial vulnerabilities
and analyze supply chain breakdown to convert areas of risk into opportunities for growth.
Our Team
Miles Wood: Partner – University of Notre Dame, MBA (BBA, Accounting) – With a deep
analytical background and years of experience in professional services, Miles is committed to
delivering high-impact solutions while strengthening enterprise value.
Godsee Joy: Senior Manager – University of Notre Dame, MBA (BBA, IT Management) – With a
passion for creating innovative and strategic solutions, Godsee is valued for her ability to
conceptualize client needs into reality while utilizing leading technology to heighten company
efficiency.
Matthew Trimberger: Manager – University of Notre Dame, MBA (BBA, Business Analytics) –
Matt routinely oversees, manages, and presents the best solutions to some of our most complex
engagements using advanced analytical models to maximize firm value.
Patrick Digenan: Manager – University of Notre Dame, MBA (BA, International Economics) –
With considerable global experience, Patrick has a keen understanding of what it takes to
create unified, long-lasting solutions for clients planning to expand into foreign markets.

6. 6
Our Approach
With a significant focus on delivering high-impact solutions, Deloitte Advisory approaches every
problem with one goal in mind: helping the client maximize value. Using the following
procedures, the Advisory team will convert potential areas of risk into opportunities for
substantial improvement.
Current Status Analysis
• Seek to understand the intricacies of the client
• Identify strengths and weaknesses
Fieldwork
• Develop understanding of company environment
o Culture
o Employee training programs
o Managerial strategies
• Conduct extensive on-site interviews
• Data collection and analysis
Reporting
• Cohesively integrate data
• Organize into visual analytic reports
• Discuss risks and potential solutions, allowing client to discern best option
Implementation
• Provide unique programs to maximize profit
• Recommend management solutions to maximize efficiency
• Build long-term monitoring tools
Current Status
Analysis
Fieldwork
Reporting
Implementation

7. 7
Work Stream 1: European Regulations
Known as a leader throughout the risk management industry, Deloitte Regulatory &
Compliance will offer the best strategies to integrate into the European market while abiding by
all regulatory measures. The service will identify standards, offer options for task delegation,
and implement a program designed to mitigate compliance risks in the future.
Current Status Analysis
• Examine HDI expense reporting procedures
• Evaluate expense monitoring success of third-party firms to determine outsourcing
advantages
• Identify a comprehensive list of European regulatory measures
Fieldwork
• Assess HDI’s current compliance staffing and resources in place, if any
• Gauge employee workload satisfaction and stress level
• Evaluate current expense compliance to regulations
• Examine current compliance risk monitoring policies
• Determine via research, interviews, and utilization of Deloitte’s advanced technological
and global resources, areas within HDI most susceptible to operational and regulatory
risks and address differences between domestic and European markets
Reporting
• Explain results of employee satisfaction survey and offer options to delegate policy
enforcement and expense monitoring roles
• Propose improved or new method to ensure expense compliance
• Present expense monitoring outsourcing options
• Provide structures to address compliance risks consistently
• Discuss accountability for managing existing or potential threats related to legal or policy
noncompliance that could lead to fines or penalties, reputational damage, or the inability
to operate in key markets, as it applies to HDI
• Explain results of trials testing expense compliance with HDI and European regulations
• Provide a strategy to address expense reimbursements in compliance with European
regulations similar to the Foreign Corrupt Practices Act of 1977
• Develop the best strategy to integrate HDI into the European economy
• Report regulations that impact operations in the European Union and all other governing
bodies and how these regulatory bodies apply to HDI’s expansion objectives
Implementation
• Design a dynamic testing program to select and review samples of products, services,
communications, and other areas. Gauge and report the operating effectiveness of
compliance controls and adherence to European policies and procedures
• Examine tools manufactured, services offered, positions in the company and how they
work to meet standards, and provide a way to meet quality control standards in Europe

8. 8
Work Stream 2: Expense Reimbursement System
At the forefront of technological advancement, Deloitte’s Internal Audit service will provide HDI
with tailored solutions to areas of risk within the current expense reimbursement program. IT
Internal Audit will help HDI to navigate IT challenges within their current system and manage
employee risks. Internal Audit Analytics will conduct employee interviews and evaluate
employee compliance, satisfaction, and efficiency with the current automated system.
Cosourcing will analyze resource efficiency and suggest where employees or system details
can be redeployed more effectively.
Current Status Analysis
• Develop a meaningful understanding of the data flow through HDI’s expense systems
• Analyze pros and cons of current system via trial research
Fieldwork
• Conduct interviews with travelling employees and personnel involved with system
maintenance; evaluate employee training, knowledge, and satisfaction
• Analyze possible inefficiencies regarding resource allocation
• Evaluate HDI official credit card policy
• Collect reimbursement data about credit card transactions and the expenditure
importation process
• Conduct system testing to identify risks/issues/loopholes in current system
Reporting
• Reorganize and structure all data collected
• Highlight key areas of risks and weaknesses within current system
• Suggest next steps, such as establishing a new control system, improving the current
one, and/or implementing improved personnel training
Implementation
• If a new system is recommended, Internal Audit will:
o Conduct cost-benefit analyses comparing external software, in house
development, and outsourcing options
• If only improvements are needed, Internal Audit may:
o Institute an expense policy training program with coordination meetings to gauge
employee satisfaction with changes
o Reevaluate which employees receive credit card access
o Create monthly limit on credit card expenses
o Set a time limit for expense importation
o Mandate receipts for all purchases
• Other options HDI may consider:
o Strategy and Assessments Service: elevate HDI’s current Internal Audit functions
o Digital Enterprise Service: provide technology-driven approach to improving the
importing expense and/or expense report review process
o Deloitte Greenhouse: one-to-two day interactive sessions focusing on innovation,
analytics, strategy, relationships, transformation, transition, and leadership

9. 9
Work Stream 3: Expense Monitoring Tool
The Forensics and Investigations department of Deloitte Advisory will identify discrepancies
in HDI’s expense reports. Forensics and Investigations has the broad international experience
and expertise required to navigate the difficulties that foreign financial environments entail.
Although Forensics and Investigations specializes and excels in uncovering existing anomalies,
a long-term monitoring tool would be best provided by the Internal Audit Analytics service line.
Therefore, a customized data analytics team, in collaboration with Forensics and Investigations
and Internal Audit, will provide continuous analysis for HDI.
Current Status Analysis
• Identify typical employee expenses
• Analyze the data sources provided by HDI (corporate credit card statements, submitted
hotel and meal receipts, PTO schedules)
• Evaluate email communications of personnel with irregular activity
• Catalog irregularities found in the data
• Categorize the data into travel, food, housing, etc. and perform pattern analyses using
data analytics to understand these irregularities
• Determine the quantity and magnitude of the irregularities using the normal expenses as
a comparative benchmark
• Further investigate the nature of the anomalies, identifying whether they comply with
HDI’s expense policy or not
Reporting
After the investigations and data analyses, Forensics and Investigations will:
• Compile the data into visual reports (charts, maps, graphs)
• Breakdown the information into the various requested categories (i.e. employee, date
range, and expenses)
• Utilize visual reports to provide a summary of the investigation and the potential risks
that arise from findings
Implementation
Internal Audit will utilize Forensics and Investigations’ findings to build a new expense
monitoring tool. This monitoring tool will:
• Analyze expense reports to identify irregularities
• Perform pattern analyses on expense categories
• Generate visual reports by employee, date range, and category
o Accommodate user input to identify high amount expenses
• Identify and minimize long-term risks
• Conform continuously to meet HDI’s evolving needs to ensure that the expense reports
are continuously conforming

10. 10
Timeline
Breakdown: Work Stream 1
Breakdown: Work Stream 2
Breakdown: Work Stream 3

11. 11
Fee Proposal
Total Professional Fees and Expenses
Breakdown: Professional Fees
Breakdown: Resourcing Mix
The above resourcing mix was constructed to maximize efficiency and effectiveness. Each distinct work
stream calls for a unique service line, requiring the allocation of staff at each level for each segment of the
proposed work. Work Stream 3 relies heavily upon USI consultants due to its data intensive nature.

12. 12
Contact Us
Miles Wood
Partner
mileswood@deloitte.com
(312) 475-8691
Godsee Joy
Senior Manager
godseejoy@deloitte.com
(312) 613-1042
Matthew Trimberger
Manager
matttrimberg@deloitte.com
(312) 481-8858
Patrick Digenan
Manager
patrickdigenan@deloitte.com
(312) 437-6560